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Subscribe to RSSTOKYO - Japan's government could run out of money by the end of October, halting all state spending including salaries, pensions and unemployment benefits, because of a standoff in parliament that has blocked a bill to finance the deficit.
The deficit financing bill, which would allow the government to sell bonds needed to fund almost half of the budget, has languished in parliament as the ruling Democratic Party tussles with opposition parties that can use their control of the upper house to reject legislation.
"Without this bill, the budget will collapse," Finance Minister Jun Azumi said on Friday, pleading for cooperation from the two largest opposition parties.
"It doesn't matter which party is in power. I really hope that we can get a multi-partisan agreement on the deficit bill."
If the bill is not passed, government spending would grind to a halt, the world's third-largest economy would be put in jeopardy and its standing among credit ratings agencies could suffer.
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Japan is not the only developed nation that is staring at an imminent fiscal crisis. Greece's debt-strapped government could run out of money within weeks unless it secures a 31.8 billion euro ($39.42 billion) tranche of bailout funds from the European Union.
The U.S. economy is facing $4 trillion worth of expiring tax cuts and automatic government spending reductions at the end of the year, and a standoff in Congress makes the chance of a compromise over the so-called "fiscal cliff" look dim.
AP
View side-by-side the progress that Japan has made since the tsunami and earthquake in March 2011.
The impasse in Japan however comes just after Prime Minister Yoshihiko Noda won over the opposition to pass an increase in sales tax in the lower house of parliament. However, a section of his party quit over the vote, and is poised to form a new party.
Noda's Democrats still control a majority in the lower house of parliament, but are outnumbered by the opposition in the upper house. Many analysts say mid-term elections could be called.
"There's so much uncertainty over the political outlook that it's hard to say how big the risk is of the government running out of cash," said Naoki Iizuka, senior economist at Mizuho Securities in Tokyo.
"The key would be the timing of any snap election and who would be leading the Democratic Party at the time."
Opposition parties have threatened to delay Japan's deficit financing bill in the past but have eventually yielded and voted in favor. This time, however, the opposition may be more emboldened because of the row over the sales tax hike.
World's largest debt burden
Japan's budget for the current fiscal year that started in April totals 90.3 trillion yen ($1.13 trillion).
The deficit financing bill allows Japan to sell 38.3 trillion yen in government bonds to fund the budget. The remainder is funded by tax revenue, non-tax revenue and income from bonds earmarked for public works projects.
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Government expenditure is forecast to reach 43.9 trillion yen by the end of September, Azumi said.
Assuming that the deficit financing bill does not pass, the government would have only 46.1 trillion yen on hand, Azumi said. This means the government is sure to run out of money by the end of October, he said.
The first in line to take a hit if Japan starts running out of money would be regional governments, which rely on tax grants from the national government for much of their spending.
The Finance Ministry could start cutting tax grants to local governments in September if there is no sign that the deficit financing bill will pass, Azumi said.
The government would try to prioritize pension and unemployment payments, but once the money runs out, there is not much the government can do, finance ministry bureaucrats have said.
Prime Minister Noda could reach an agreement with opposition parties to provide some temporary funding. However, Noda does not have the right to override parliament on the voting of the deficit funding bill.
Japan already has the world's largest debt burden at nearly twice the size of its $5 trillion economy, and a breakdown in fiscal spending could increase skepticism that politicians are losing their grip on public finances.
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The Last Line "That Politicians are Losing their grip on Finances"
They haven't had a Grip on Finances since allowing deficit spending..When you start talking about balancing a budget and in the balancing add MORE Debt rather than pay down your deficit your concept of responsible governing is non existent. And this has been allowed worldwide which puts everyone in the same fix and it is all due to corrupt bankers, corrupt politicians, and corrupt and Greedy Corporate leaders....
They COULD fix it quite simply but Greed will not allow them to do the One thing that could save an economic Meltdown.
Forgive All debt Everywhere!!! Start Over Fresh and in the process, remove all the politicians and greedy corporate big wigs from power, retire them all with a pension equal to a Laborer and redistribute any wealth they have hidden away to responsible People that want to Save Planet and People, not Destroy it peace-meal. Start manufacturing all of the Inventions that have been with held due to profiteering and release from custody all of those held by the greed of the system.
We do not need fascism, socialism or communism, We Need capitalism that works like it worked from the 40's through the 60's.........And a Democracy that goes back to its roots. Of the People, BY the People and FOR the PEOPLE!!!
When Families have to have both parents working and there is nobody to raise kids we see crime rise, morality forgotten and the attitude becomes I am going to get mine instead of Who can I help today!!!
It is all coming to a One World Government. Voting in November is not going to stop it. This and all governments are so corrupt, they do not want Honesty or Integrity in the government any longer. All that they want is Our Money and to Control us. We as Americans have been sold out. They are going to put in office whom they want. Voting is nothing more than a smoke screen. I am tired of signing petitions, they are not doing a bit of good. if they where doing good, alot of this corruption would have been stopped. We have criminals in the government offices, and a criminals just keep doing as they please until they are finally caught and brought to justice. But as we read we have no such thing as a honesty Justice System. Until the American across the United States unite and form a Physical Protest at Every Government Office, nothing is going to change.
not to sure what peeps expect when greed rules the planet
live with your rich achievements and head to the poor house
we made this planet time to fix our fu ups
stop being greedy
and this is directed to the billionaires of the planet
and i dont want to hear oh we employ billions
that doesnt justify billions to trillions in profits for yourself
oh but the stock holders
the stock holders are loosing big time but not the billionaire owners
The world is a mess due to overspending yet our leader continues to spend like a drunken sailor.
With Japan holding 20% of our foreign debt this is a blessing. Looks like Obama won't be borrowing anymore money from Japan.
This could be the wake up call he's always taking about that he needs so he can become a responsible President.
All we need now is for China to cut him off.
.....so he can become a responsible President.
I love a good laugh in the morning. Thanks!
Karl
We learned last August that Obama's government can't operate without borrowing money. I don't know what you were taught growing up, but I was taught that if you don't live with in your means, you are not a responsible person.
Obama did create a never ending, ever growing debt crisis last August that continues to get worse every day he's in office. He is pushing the National debt to $16 trillion and hasn't curbed his spending nor his borrowing. If you consider this the actions of a responsible person, than your have no idea of the definition of responsibility when it comes to handling money.
If Japan decides to sell off its US debt and China decides to buy it, China will own 46% of our foreign debt. That is good for this country, how?
You do realize that if Obama can't borrow money from foreign nations, our government will collapse and cease to exist.
Just leave everything to the DEMONCRAT Party, and their "Tax and spend" evil leader, Comrade "Barry the happy Kenyan". He'll tell the world he is going to bail Japan out so he can win the Asian vote in this country in November, and then if he is elected, he'll suddenly forget his promise. But he has never done anything like forget a promise, has he? After all, he is "The Chosen One".
Cant find anything tangible to b*&^H about so you resort to name calling? Nice.
The truth hurts.
How can every country in the world be in debt? Who are they in debt to?
Each other to answer your question. If Obama can't borrow money from foreign nations, his government will collapse and cease to exist. Look at Greece and all those other countries in Europe who governments are on the verge of collapse due to debt.
With Obama pushing our national debt to $16 trillion with his never ending, ever growing debt crisis hanging over this country's head, watching what is happening in Greece and the rest of Europe is viewing this country's future.
There is one principle of economic that never changes; The deeper you go in debt, the hard it is to get out of debt.
No but what I mean is if I owe you 40 mill and you owe me 40 mill then there really isn't a debt. Ultimately at least one nation has to be on the holding side of debt
How many of you remember back in the 1980's when we thought "Japan is taking over!" the United States.
No, really, people thought this. They bought a few golf courses in Hawaii and California and had a huge trade surplus with us, and lower wage base (those were the days!).
Times change. And that is about all that is certain in this world - if you see a trend, it is likely to change, not continue.
Food for thought for all you gold-bugs out there....
They STILL own dozens of skyscrapers in NYC. Let's see what happens...
Freeze the pay checks of the Diet (Japanese Congress) immediately until the government is funded. That should resolve the problem.
Calling there Bluff..They know Chaos will follow..But in again a good way to clean out the corruption..
Maybe the Planet Earth should ask the Founders for a bailout LMFAO!!!!
That will be the end of Toyota, a company heavily subsidized by the Japanese Government. Oh, what a feeling.
Political parties are ruining the world's economies. They all want power to line their own pockets. There must be a better way. It's no wonder that people are rioting across the world. Throw ALL the bums out. And keep throwing them out until the message get across that the world's people are sick and tired of the typical politicians and rulers. Take your (or our) money and GET OUT!!!!
This country and gone to hell in a handbasket. Everyone wants to take take take and now nothing is left.
.
DOES ANYONE have the BALLS to read behind the lines in these financial articles.
EVERY ONE OF THEM POINTS to GOVERNMENTS THAT THINK MONEY BEFORE PEOPLE !!!!!
DEVIL ACCEPTS but GOD FORBID if GOVERNMENTS WOULD THINK FIRST AND FOREMOST BEFORE ANY THING ELSE "THE PEOPLES OF OUR NATION"??????? and then all the rest will fit in and make a NATION VIBRANT.
Is that part of CAPITAL COMMUNISM. Money before People ?????
This is what happens when you try to control your country with false inflation. Before the European continent went euro (and all used the some money), a majority of these problems did not exist.We cannot bail anyone out ever again. This is what happens when the government spends more money than it has. Yes we all know it was George Bush (the King of America) that borrowed over 13 trillion dollars from China. He did not give it a second thought. He didn't care that it would take over a hundred years to pay back that money and all of it's interest. He knew that there would be somone else to take the fall. What is happening to Japan, Greece and others is also happening to us.
It no longer matters if you are a demoncrat or a reflubican. It is past time for the rich to pay their share. The middleclass can no longer support the rich. I fear that it is already too late for us to pull ourselves out of the financial hole that Mr Bush so willingly put us in. I am sure that the Chinse government is just sitting there and grinning ear to ear over the world's predictamnet.
frances
If your going to blame Bush for this country's debt problems then you have to also blame the Democrats who controlled congress at that time and supported Bush's actions.
The Democratic Congress had the power to stop Bush, but didn't. Get your facts straight when you are going to place blame.
What is interesting is how many of you Bush blamer's fail to mention the Democratic Congress's role in the debt. Its no coincidence that the Democrats controlled congress when Bush grew the debt and Obama took our debt to dangerous levels.
Stop acting and treating us like we're as ignorant as you are on the facts.
Does a PLUCK NICKEL mean anything??
That must be why they come over here and try to bargain in every store!!! I worked in retail and they are hands down THE WORST CUSTOMER IVE EVER HAD. I dont really care what happens to them or China either. I do however care that Obama has @!$%#ed up so bad here that we could be next.So VOTE REPUBLICAN------FOR YOUR FREEDOM AGAIST SOCIALISM AND THE OLD FASHIONED AMERICAN VALUES!!!
Let the Bush Tax Cuts expire. For the mere pittance you are getting in a tax break, you are paying triple for everything else through inflation.....which our gov't says does not exist, and the rest of the economy is diving. No one wants to give an inch..that includes employers and employee's. The tax cuts that are in place has held the country back from growing for too many years and was implemented originally for political reasons....to make the leaders look like they are helping you out..........so how has that been working out for you?
I edit films for documentaries and see behind-the-scenes footage most Americans never get to see... Both parties are full of corruption. Politicians and the media are literally owned by the 1%. Although some thought that Obama would be different because he did not come from a powerful family, his entire educational & political career was handed to him by the 1%. He owed them dearly and when he became president they came calling...
For instance, the LENGTHY Obamacare bill is LOADED FULL of language that makes certain we overpay for healthcare for many years to come. In guarantees the 1% will get paid well before your health insurance premiums/healthcare tax ever reaches the doctor.
In comparison, according to Wikipedia: Canada's provincially based Medicare systems are cost-effective partly because of their administrative simplicity. In each province each doctor handles the insurance claim against the provincial insurer. There is no need for the person who accesses health care to be involved in billing and reclaim. Private insurance is only a minimal part of the overall health care system.
So... if Japan goes broke.. will it be up for sale? :I
Japan should do what the US does, print more money problem solved.
What ALL these FINANCIAL FALLS ARE or SHOULD be telling ALL PEOPLES is that WE THE PEOPLE have been poorly educated IF NOT PURPOSELY MANIPULATED about how this world runs and by REMOVING THE HUMAN EQUATION OUT, ETHICS AND MORALS. CHAOS has sprung to FUEL more inequality in SOCIETIES.
YES! "WE THE PEOPLE" have been duped, brainwashed, con-jobbed.
lol this artical sounds like Us.. fighting over budgets and spending,
being retarded and airing our dirty laundry for the world to laugh at.
you guys dont understand the value of the japanese YEN, they do not Use Decimals.
ie back in the 1990's 100 YEN = $1.00
today 79 yen = $1.00, that means over there $0.80 is worth a dollar, which means their money
is worth 20% more than ours.